‘Just good friends’ as council embarks on Capita love-in

What a difference a year makes. Twelve months ago the Kerslake Review hadn’t been thought of and Birmingham city council was slowly starting to understand the scale of the Trojan Horse affair. There was, it seemed, but one issue on the mind of the body politic – the C-word, Capita and its profits, writes Paul Dale.

The main topic of debate at the Council House in the first few months of 2014 centred on Service Birmingham, the joint venture ICT company run since 2006 by outsourcing giants Capita who had been fighting a long battle over allegations of fleecing the council by extracting obscene profits from the arrangement.

In October 2013 Chamberlain Files revealed how Capita had pocketed £1 billion in the space of just six years for running the council’s ICT systems. The total was more, even, than the £800-odd million the council has to save between 2010 and 2017 in response to the Chancellor’s austerity grant cuts.

Months of Labour group rows, a very public campaign and petition organised by David Bailey, Professor of Industrial Strategy at Aston University Business School, piled pressure on council leader Sir Albert Bore and deputy leader Ian Ward to publish the Service Birmingham contract, which they eventually did although in a heavily redacted form.

A £20 million cut in the £120 million annual cost to the council of Service Birmingham was negotiated and since then a further £12.5 million reduction has been agreed. It’s expected that the annual amount paid to Capita will eventually be trimmed to about £80 million.

The possibility of axing Service Birmingham, scrapping the contract entirely, and taking the ICT service in-house or to a consortium of local firms formed part of the manifesto of Labour backbencher John Clancy in his unsuccessful attempt to unseat Sir Albert as council leader.

Ian Ward rather cleverly saw off Clancy by arranging to bring back in-house the council call centre which had been the subject of hundreds of complaints from councillors and their constituents.

And since the events of Jan-March 2014, Service Birmingham has pretty much fallen off the agenda having been overtaken by Kerslake, the council improvement board and the Future Council Plan.

It has become clear, though, that extensive efforts are underway to refresh the relationship between Capita-Service Birmingham and the council under the leadership of the newish council chief executive Mark Rogers and Service Birmingham’s new CEO Tony Lubman.

In fact, you could describe what’s happening as a council-Capita love-in.

A scrutiny committee inquiry came up with a number of ideas to improve the relationship between Service Birmingham and the council, based chiefly along the lines of ‘we’ve got to be friends’.

Draft minutes of the governance, resources and customer services scrutiny committee on February 6 state that the aim is “for both officers and members of the city council to see Service Birmingham as the IT department and to refresh the partnership – on both sides”.

There is a need to address “historic mistrust” and it was acknowledged that this cannot be changed overnight, but a number of ideas were put forward on how both partners can move forward. The aim is to re-set the relationship from a contractual one to a genuine partnership.

No more “them and us”, we are promised, and Service Birmingham is to be seen to be part of the city council management and treated as a true partner under the motto: “One council, one organisation delivering together.”

And if that sounds a bit cheesy, city councillors are being invited to drop in to the Service Birmingham offices, walk around and chat to staff. How often are Service Birmingham staff seen in council buildings and BCC officers seen at Service Birmingham, the scrutiny committee asked.

Significantly, there will be a closer working relationship at the top of both organisations. Mr Lubman is to be treated as a member of the council’s senior leadership team and Service Birmingham is to be seen as a department of the city council.

New ICT projects are to be market tested “to counter the perception that Service Birmingham is out to make money from the contract by demonstrating value for money”. There is to be a new sense of partnership working and an understanding that Service Birmingham can bring innovation and isn’t “just after profit”.

The scrutiny committee minutes continue: “The importance of the relationship to both partners was also acknowledged. BCC is a hugely important relationship for Capita – the meeting was told how proud of this relationship Capita is as one of the highest profile IT and transformation contracts. For the city council, the importance lies in the need to fulfil service needs and provide the best possible service for citizens.”